New Internationalist

The Facts

Issue 168

new internationalist
issue 168 - February 1987

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The developed countries have created a powerful position for themselves
in the international marketplace - one which they are determined to
maintain by controlling trade regulations and financial institutions.

Export expansion

The export expansion of World Trade has largely come from manufactured goods. Sales of commodities like food and metals, in which developing countries tend to specialize, have lagged behind. The graph indicates the volume of world exports, taking 1960 as a base of 100 for all items.1

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Protection Bracket

Countries often protect their balance of payments by imposing tariffs on imports. But equally effective are 'non-tariff' barriers - like setting quotes, or requiring that importers of certain goods have licences.

Developing countries are hit particularly hard by non-tariff barriers when they try to increase exports of manufactured goods. In 1984 the rich countries imposed such barriers on 21% of goods form developing countries but on only 11% of goods from other industrialized countries. This was primarily due to restrictions on clothing, textiles and footwear produced by developing countries2

The useage of non-tariff barriers by any country can be expressed as its 'coverage ratio' - an index which runs from 0 - 100. Australia and France operate a very extensive system of quotas and licenses. The high figure for the US reflects restrictions on the imports of fuels - for other goods the US average is a lot lower. The figure for Japan is suspiciously low - probably because there are many Japanese procedures not covered by this survey.

Those for a selection of countries in 1983 are indicated below.3
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The Triangular Trade

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Half international trade is between one Western nation and another. The Third World plays a smaller part. And nowadays it had to generate a trading surplus with the West in order to repay debt - mostly by reducing imports. The diagram shows the flow of exports in 1985. Each percentage is of total world trade.1


The Debt Yoke

Debt service ratio (1984)4

Total
debt
$bn

(1986)5

On the left some of the more heavily indebted countries ranked in order of their debt-service ratio. This is the percentage of a country's annual exports which the repayment of interest and capital represents in a particular year. If it is high this makes it more difficult to pay off the debt. The second chart (below) shows the external debt of developing countries ($bn).8[image, unknown]

Bolivia

38

4

Morocco

38

19

Mexico

34

99

Ecuador

33

9

Egypt

32

38

Uruguay

30

4

Argentina

29

51

Brazil

27

107

Chile

26

21

Costa Rica

25

4

Nigeria

25

19

Colombia

24

11

Ivory Coast

21

8

Jamaica

21

3

Indonesia

15

36

Peru

15

14

Philippines

14

25

Venezuela

113

34

Zaire

8

6

Yugoslavia

7

20


The Big Bankers

Below are the top 10 international banks ranked according to their 1985 capital. Most of the assetts consist of money owing to the bank.7

Rank

Bank

Country

Capital* ($m)

Net Income ($m)

Assets ($bn)

Employees

1

Citicorp

US

6550

998

167

81300

2

Credit Agricole

France

5224

145

123

74900

3

Barclays Bank

UK

4778

648

94

105900

4

Banco de Brasil

Brasil

4339

813

56

117498

5

Nat West

UK

4291

639

104

92000

6

J P Morgan and Co.

US

4142

705

67

13506

7

Fuji Bank

Japan

4009

340

142

15836

8

Deutsche Bank

W. Germ.

3905

354

95

48851

9

Union Bank of Sw.

Switz

3882

333

67

18677

10

Sumitomo Bank

Japan

3852

367

135

14486

This is a selection of other banks in the world's top 500.

Rank

Bank

Country

Capital* ($m)

Net Income ($m)

Assets ($bn)

Employees

Aotearoa (NZ)

479

Bank of NZ

Aotearoa

164

35

4

7,773

Australia

52

Westpac

Australia

1,589

260

31

43,380

53

ANZ Bank

Australia

1,528

226

26

38,031

Canada

26

Royal Bank of Can.

Canada

2,408

357

67

37,430

35

Bank of Montreal

Canada

2,030

248

57

33,281

37

Toronto Dominion

Canada

1,839

304

34

20,381

UK

16

Lloyds Bank

UK

3,325

478

63

70,982

23

Midland

UK

2,667

176

83

78,590

40

Standard Chartered

UK

1,791

191

41

33,009

*Capital is used here to mean the total group shareholders' funds


Give and Take

For developing countries which have been receiving credit from banks and international agencies the net flow of money has been reversed. As interest payments now exceed the inflow of new loans, the poor countries are now financing the rich.8

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Country Credit Ratings

Bankers rate countries according to their credit - worthiness - with some interesting results. This list, which takes into account factors like political stability, record of debt payment, openness to international capital and economic prospects, is compiled by the magazine Institutional Investor. The maximum rating is 100.4

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1 International Trade 1985/86, GATT 1986.
2
World Development Report, World Bank, 1986.
3
World Bank Economic Review, World Bank, September 1986.
4
Institutional Investor, June 1986.
5
. Estimates as at Dec 1986, various sources.
6
. World Military and social Expenditure, 1986, Ruth Leger Sivard, World Priorities Inc.
7.
Euromoney, September, 1986.
8
. UN Economic Survey 1986, United Nations.

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